European threats

We said last week that the postman always rings twice. And indeed, Donald Trump's email has returned to Brussels: if there is no agreement, tariffs will rise from 10% to 30% on August 1, not counting the 25% on motor vehicles and the 50% on steel and aluminum, or any that may be imposed on European pharmaceutical products.

It's true that this is a negotiation that Europe is trying to exhaust. This means that the EU's retaliation against the April tariffs (€21 billion on chicken products, motorcycles, and textiles), which were due to take effect on July 15, is postponed until August 6. A new tariff would have to be added to this list, for an additional €72 billion (including aviation, alcohol, and food), which still requires the agreement of the various countries.

The EU faces a double problem: consensus and the scope of measures

But a credible EU threat faces a double problem. First, achieving the necessary consensus. Regarding tariffs, the still-unused first package already provoked angry responses from Ireland, Italy, and other countries, forcing it to be lowered; and regarding the second list, it is still unclear who supports what, although criticism is beginning to emerge, for example, from Matteo Salvini of the Italian League, regarding negotiations that appear excessively biased toward German industrial interests. Chancellor Merz expects a reasonable agreement since, in his opinion, 30% would be a disaster for German industry. And you know the saying circulating in Brussels: the common trade policy is Germany's brand; Germany's is determined by its industry; Germany's is determined by the interests of the automobile industry, and these are defined by a well-known German motor vehicle brand. In any case, if the European response is applied to nearly €100 billion, that figure falls far short of the €380 billion in EU exports taxed by the US.

Second, some EU circles are raising concerns about the possible activation of the so-called anti-coercion instrument, approved in 2018 but never put into effect, which France now claims it would like to use, even though Germany opposes it. Its implementation would penalize American service exports, impose taxes on its tech giants, and limit investment in American companies or their access to the domestic market (preventing them from bidding for public contracts). But, as the classic saying goes, if you don't intend to go to war, don't threaten it. And we don't think we'll make the US tremble too much, because the signals we've sent are the opposite: accepting Donald Trump's demands on NATO, ruling out taxes on tech companies, suspending the file on Platform X, and discussing who pays for what of the American aid to Kyiv. Bad business for the EU: that's what it means to confront a real country from a theoretical union of states.